Migrating to the cloud is a compelling option for many businesses, large and small, as it offers a low cost of entry and ownership as well as faster time to market compared to traditional on-premise business software. According to IDC, software-as-a-service (SaaS) solutions are set to grow six times faster than all software, and they’re expected to show compound annual growth (CAGR) of around 26 percent through 2014.
Conglomerates, multi-national companies, and large corporations have long been slowed down by legacy on-premise ERP systems that have been time and cost-prohibitive to update and customize to changing business needs. Past customizations made to these legacy applications using proprietary tools had a counterintuitive impact—they version-locked companies, prevented them from upgrading to the latest ERP release, and limited the ability for these businesses to adapt their ERP systems to their requirements in a timely fashion.
It’s important to recognize, however, that while the cloud model resolves many problems of on-premise software, cloud applications as standalone silos can introduce inefficiencies, integration challenges, and IT and administrative overhead of their own. Without integration among cloud applications, business users may still be forced to navigate multiple applications and data repositories of data for their everyday activities—slowing down processes and reducing the agility the company needs to grow.
Organizations that opt for a cloud strategy, too, face an additional consideration—whether to use individual cloud systems for key processes such as finance, CRM, and e-commerce or use an integrated suite that covers those functions and more. Consider the following implications of siloed cloud applications:
- If multiple cloud applications are implemented, data fragmentation still exists. Overlapping databases must be consolidated and reconciled to create a comprehensive and consistent view. In effect, the on-premise software hairball has simply been transferred to the cloud.
- Each application has its own style of configuration. User efforts to adapt the software to their needs can be hampered as they try to keep track of multiple methods of configuration.
- Getting a comprehensive picture of how people are using the software is difficult because multiple applications must be monitored.
- End-to-end processes are difficult to manage because they must be integrated across multiple applications and databases.
Evaluating the Customization Capabilities of a Cloud ERP Platform
With cloud computing quickly gaining traction, it is important to select only those cloud ERP vendors that have the maturity, breadth of functionality, and robustness of infrastructure to support your operations.
One example is analysis and reporting. To achieve a reliable view of business performance, a company with six cloud providers would face a labor-intensive business intelligence task. It must pull the information from various sources, dump it into spreadsheets, and spend considerable time extracting, consolidating, and ensuring the integrity of data from multiple applications.
To avoid these limitations, it is essential to have a collection of cloud applications that are integrated around a single codebase and database, and which contain an integrated business process perspective. Furthermore, entrusting a cloud vendor with your mission-critical data and business processes calls for thorough due diligence. The cloud vendor’s overall market viability and experience must be considered in this evaluation.
Customers must endeavor to ask these key questions:
- How long has the vendor been in business?
- How long has the vendor been providing customers with a true cloud solution?
- How many active organizations are running on the cloud solution?
- What are the vendor’s market share and market share growth?
- How financially stable is the vendor? Is the vendor public or private?
- How much cash on hand does the vendor have? Are they profitable?
For rapidly growing and mid-sized businesses, the resources required to maintain and grow an IT infrastructure to support the needs of the business can be enormous. Cloud computing is often seen as a cost-effective and quick-fix solution, but businesses must be careful not to repeat the same mistakes of the past and end up with another application hairball, albeit one running in the cloud.